Tesla Motors Inc (NASDAQ:TSLA) will release its fourth quarter earnings report tomorrow, and as has become typical, Wall Street has extremely high expectations. Baird analysts have increased their own estimates for the automaker and say they see a few catalysts which could drive shares higher. They also see the potential for Tesla to surprise to the upside in earnings per share versus their estimate.

Tesla Motors TSLA

Outperform rating for Tesla reiterated

Analysts Ben Kallo and Tyler Frank reiterated their Outperform rating for Tesla Motors Inc (NASDAQ:TSLA) going into tomorrow’s report, although they raised their price target to $215 from $187 a share. They updated their earnings per share estimate for the fourth quarter to 21 cents per share, although they think it could go as high as 25 cents per share.

Their original estimate was 12 cents per share, but they raised it after Tesla Motors Inc (NASDAQ:TSLA) announced that it had beaten expectations for deliveries in the fourth quarter. However, they suggest that higher costs because of the automaker’s rapid build-out of Supercharger stations and new showrooms could offset the boost Tesla received from higher deliveries.

What to expect in Tesla’s report

The Baird team will be looking for 2014 delivery guidance of between 30,000 and 32,000 which is even higher than their updated estimate of 29,000. They particularly see upside if Tesla Motors Inc (NASDAQ:TSLA) reveals even greater production efficiency. They also believe there’s an “outside chance” that Tesla will announce that it is planning a second production line at its California facility. The Baird team noted that they might be early in this expectation and that increased production doesn’t always mean increasing demand. However, Tesla already has a backlog of orders, so if it can increase production, it would probably be seen as a positive.

In relation to scaling production, the Baird team is hoping for an update on the huge battery factory Tesla Motors Inc (NASDAQ:TSLA) mentioned in its last earnings report. Their channel checks suggest the automaker might be in the process of choosing a site for the facility, starting with deciding which state to build in based on tax benefits and subsidies for a battery factory. They believe there will be a competition similar to the one held for states trying to get SpaceX’s Launchpad.